AHSS 1030 Chapter Notes - Chapter 7: Clustering Illusion, Absorptive Capacity, Prospect Theory
2 Sep 2013
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Document Summary
Decision making is the conscious process of making choices among alternatives with the intention of moving toward some desired state of affairs. The first step is to identify the problem or recognize an opportunity. A rational choice paradigm, which has dominated decision making philosophy in western societies for most of written history. Subjective expected utility is the probability (expectation) of satisfaction (utility) for each specific alternative in a decision. The second step involves deciding how to decide; that is, what processes to apply to make the decision. One issue is whether the decision maker has enough information or needs to involve others in the process. Another issue is whether the decision is programmed or nonprogrammed. Programmed decisions follow standard operating procedures; they have been resolved in the past, so the optimal solution has already been identified and documented. because the problems are new, complex, or ill-defined. In contrast, nonprogrammed decisions require all steps in the decision model.
